Gold is now the #1 source of funds for everyone in need of cash. From hedge funds to Merrill Lynch all the way down to Dennis Gartman, gold is being sold with reckless abandon. More importantly, central banks own a shit load of gold. Would you be surprised to learn Italy sold gold in order to raise cash? Silver is nothing more than a levered version of gold. Hence, the move lower is extreme.
What’s very important to note is the fact that gold is no longer acting defensive. The Federal Reserve wants gold to trade lower and fast. They do not want GLD competing with TLT for scared money. Nevertheless, the drop in commodities is scaring the shit out of people. Whenever it happens, people attribute the drop to “slowing in China.” I give up trying to get a handle on China. One week they are slowing, the next things have never been better.
If you believe the Europeans will let everything collapse, short term, gold is a sell. If you believe they will print, this is a buying opportunity.
In my opinion, this is capitulation. Every fucktard with a series 7 or Zeeco trading account is selling gold now. I do not like to travel with the herd. So, naturally, I think these fucking idiots are wrong. But my risk appetite is nil. I am 75% invested and have reserved my cash for lower prices. If and when the market gets into my comfort zone, I will take a shot at some miners, like RGLD, EXK or AG. But remember, liquidation trades are volatile and the market is filled with the biggest fucking idiots the world has ever known.
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